As the other's have explained, it started out on AVEN as sort of a fun, positive thing (like welcoming new people, cheering/celebrating/general happiness) and spread to be a symbol of aces and everything asexy (e.g. "cake is better than sex" or "[eating] cake is better than _____"): http://www.asexuality.org/wiki/index.php?title=Cake

It's spread it's way across the 'net and ace folk like to use it for all sorts of reasons, one of which is like Singulaire said about it being a joke answer. Others because cake.